The great Chinese movie gold rush

“How fast is a speeding bullet,” asks Village Roadshow chairman Robert Kirby in response to a question about the growth rate of the Chinese film industry.

The Australian-based cinema and theme park group is parleying its long-standing Chinese connections into a ­­­co­-production business making Chinese movies specifically for Chinese audiences, rather than trying to sell Western stories to China.

Village Roadshow is a major co-financier and co-producer for Warner Bros in Hollywood and its films have won eight Academy Awards.

“They are being inside the market, rather than being an outsider . . . I think it is a smart move.”

Village Roadshow Pictures Asia has had a spectacular early success. It’s Journey to the West: Conquering the Demons, released in February, was a hit in Chinese cinemas.

Directed by Stephen Chow, the picture cost $25 million to make and grossed $200 million, Kirby says.

“It was the biggest Chinese film in the history of Chinese cinema.”

The company followed up with a romantic comedy, Say Yes!, which grossed $30.9 million.

Asian actors move in from the fringes

The influence of China’s wealth on the film industry is starting to achieve what 200 years of immigration has failed to do – integrate Asian faces into Australian story-telling.

For generations, Chinese actors have been relegated to roles of spinning Kung Fu “aliens” or bit parts as shopkeepers and waiters, and guest appearances as foreigners.

But it is amazing what a few billion dollars can do.

In order to cater to the tastes of the massive and growing Chinese audiences, and to accommodate the stipulations of the Chinese government, filmmakers around the world are starting to use Chinese locations, stories and characters in their productions.

Witness the James Bond movie Skyfall, partially set in a glittering version of Shanghai, and the fact that extra scenes were filmed for a special Chinese version of Iron Man 3.

One side-effect of the movie world’s new Asian love affair is the brighter career prospects for Western actors with an Asian background, says South Australian film producer and director Mario Andreacchio, who has just signed a multi-picture deal in China.

Andreacchio, who is also chairman of the Australia-China Screen Alliance, says a growing representation of Chinese faces and stories would be – at long last – a recognition of the reality of the demographic make-up of the Australian population.

Around 867,000 people in this country report Chinese ancestry.

This kind of adjustment process is already underway in the US, where a steady growth of Latino characters in mainstream productions has followed the influx of immigrants from south of the border.

In this country, it is not just Chinese culture that will start to infiltrate Australian storytelling as the Anglo-Celtic stranglehold is pried away, finger by finger.

Says Andreacchio: “I was born in Leigh Creek in the Australian outback and my whole experience of the outback, I’ve never seen it represented on screen. It is always the classic Anglo-Australian in the bush hat . . . that is more of a myth than reality.

“What about the Italians, Greeks and Poles who went out ‘roo shooting, without being able to down one kangaroo, who formed close and touching relationships with the indigenous people?”

Andreacchio’s company, Adelaide Motion Picture Company (AMPCO Films), is doing its bit to bring Asian-Australian stories to the screen.

In fact, it has been at the forefront of exploring opportunities in China, recently signing its multi-film agreement with the Shandong Film and TV Media Group.

It’s first co-production will be Gold Road, a film about Chinese acrobats who came to Australia in the 1800s to entertain in the gold fields.

The film had an initial budget ­of $15 million, but Andreacchio says it may now cost up to $20 million to make.

“There will be four or five other productions we are going to do together,” he says.

Massive threat, enormous opportunity

The sheer size of the Chinese domestic market, and the strength of its spending power, means the Australian film industry has no choice but to find ways to work with it. For many film-related businesses, it is a matter of adapt or die.

The industry here is being hammered by shrinking government funding, a collapse of its traditional international audiences in Europe and the US, and increasing competition from cheaper production and post-production in China and India (not helped by the high Australian dollar).

“What you have is a real restriction on the growth of the industry. Conventional markets are collapsing, government funding is contracting. The industry wants to expand, but you have a major deadlock,” Andreacchio says.

While Australian filmmakers struggle, across the South China Sea the Chinese film industry is booming. Chinese audiences are undergoing rapid growth of 30 per cent to 35 per cent each year, as families spend their recently-acquiredleisure yuan at the movies.

China is now the world’s second-largest market for film and is expected to surpass the US by 2020, according to Ernst & Young.

Every day, up to five new cinema screens open somewhere in China. And there is plenty more to come: there is one screen for every 200,000 people (a tenfold increase over the decade) compared with a screen for every 9000 people in the US. The box office takings in China (more than $2 billion last year) are expected to eclipse those of the biggest market, the US, in the next three to five years.

“And it could double in the next 10 to 15 years. You’ve got this massive expansion happening,” Andreacchio says.

As a producer of movies, China is already challenging Hollywood. More than 600 movies a year are made in China, although only about 150 get a cinema release. The rest are treated as tele-movies.

Blockbusters are a hit

The Chinese audiences may be massive, but that does not mean that Western studios can just export their movies; Chinese government quotas mean that only 34 foreign films are allowed in each year.

Even so, Hollywood still took half of the box office receipts because of the popularity of its Western-style blockbusters – illustrating the immense opportunity for those films that are allowed in.

A successful launch in China can make a massive difference to a film’s total profitability: Avatar took around $US220 million at the Chinese box office in 2009.

Bypassing creative blocks

To get around the quota system, Western film companies have flocked to Beijing and Shanghai to open studios and launch co-production agreements.

It is a gold rush, in a historical reverse.

Andreacchio says there are a number of ways to work with Chinese companies to get a film made. You could:

1. Produce a film under a co-production treaty, which means it qualifies as both 100 per cent Chinese and 100 per cent Australian, irrespective of the co-production percentages, and avoids the quota system. The Dragon Pearl (directed by Andreacchio) and 33 Postcards are the first two to come to fruition since the Australia-China co-production treaty came into force in 2008.

2. Enter a non-treaty co-production with a Chinese company. It may be able to qualify as Chinese, depending on the censors. This is more for countries that do not have a treaty in place, such as the US. Children of The Silk Road was the first of these Australia-Chinese co-productions to be screened in 2008.

3. Do a company-to-company joint venture, where a Chinese company invests in a foreign film without requiring that the film be accepted as a Chinese movie. This type of film falls under the quota system.
4. Use a Chinese company as merely the service provider for an entire foreign production. This also falls under the quota system.

Roadshow to Beijing

Village Roadshow’s Kirby says his company expects to produce three to five movies each year.

The current project is Man of Tai Chi, directed by Keanu Reeves (a joint venture with China Film and Dalian Wanda Group) and scheduled for imminent release.

Kirby says the movies appeal to the Chinese market: “We are producing and creating stories and films that are earning as much in total as US films are.”

Kirby’s company (founded by his father) has an advantage when it comes to the Chinese regard for longevity – it has been doing business in China for more than 40 years.

The company distributed Bruce Lee movies in Australia in the 1970s and, in a joint venture, operated cinemas across Asia and opened the first multiplex in Shanghai.

“This is a business we have been involved in throughout our history. That’s what we do. That’s what we are about,” Kirby says.

He says his company, Village Roadshow, has spent three years working on a strategy to become part of the domestic Chinese filmmaking industry.

“We want to be part of the intrinsic growth of the Chinese film market, investing in and co-producing Chinese films,” he says.

Funding our stories

Most Australian-made films are dependent on government funding of one type or another and, while the industry has grown over the years, the level of funding has not, says Andreacchio, who sees Chinese investors as a potential source of funds.

“About 15 years ago, Australia was making between 25 and 32 feature films a year. Now we are struggling to make 15 to 20 films a year.

“The industry has a much greater number of people, budgets have gone up, but we have less money than we did 15 years ago.”

The Australian film industry needs to find other ways to obtain finance: “There needs to be a fundamental rethink in the way we do film”.

There’s not much money available from private investors, but Andreacchio says that could change if Australian companies use arts funding to promote their “soft diplomacy”.

He says the Chinese use cultural exchange as a “bridge” for building relationships.

“All of China’s international business has a political, economic and cultural component and the Chinese expect all business to have those three components.

“Chinese businesses are required to bring some form of soft diplomacy in bringing Chinese culture to the world.”

The biggest film companies in China are all part of bigger conglomerates that may be built on industries such as technology, manufacturing or pharmaceuticals.

An Australian company that invests in culture will have greater credibility in Chinese eyes, says Andreacchio.

Local filmmakers also need to break the habit of thinking one-film-at-a-time and come to Chinese financiers with a package of productions. This will allow producers to move through the different forms of engagement.

Andreacchio says the relationships his company built through completing a treaty co-production – which involved a “cultural exchange” – have led to interest in funding a production of The Alchemist, which has no Chinese elements at all.

Hungry for expertise.

With China ramping up its production, there is an insatiable appetite for know-how. “They want to move away from ‘Made in China’ to ‘Conceived in China’. They know there is a technical and creative gap and, rather than starting from scratch, they are buying companies,” Andreacchio says.

The US special effects company Digital Domain Productions was bought by Beijing’s Galloping Horse Group and the Mumbai-based Reliance MediaWorks for $30.2 million last September.

“China is definitely on the march and it is this period of time that I believe we have to build very strong relationships with China . . . so we don’t get smothered,” Andreacchio says.

China is upskilling very quickly. It expects to train 1.4 million visual animators over the next four years. At the same time, thousands of people working in visual effects have lost their jobs in the US.

Screen Australia’s Chris Oliver says the Australian industry has a role to play in the development of the Chinese film industry.

“Australians are creatively smart,” he says. “We have some really good producers, directors and writers and the Chinese are wanting to work more internationally – without being restricted to cultural flicks.”

Censorship

Of course, in dealing with China, there is concern about censorship and undue influence of the Government and censors on the content of movies.

Scenes of hanging laundry in Shanghai were cut from Mission Impossible III, a reference to the Cold War was deleted from Casino Royale, and films with sexually explicit themes have been banned, including Farewell My Concubine, Brokeback Mountain and Memoirs of a Geisha.

However, Andreacchio makes the point that not all roads lead to China. There are still other sources of funding for filmmakers who want to avoid restrictions, and other markets in which to screen.

BRW

BY Fiona Smith

Fiona is Work Space editor for BRW, covering workplace and career issues
from our Sydney newsroom.